Hewitt associates...Attempting to be different in a crowd
ATTEMPTING TO BE DIFFERENT IN A CROWD
Hewitt Associates was an American provider
of Human capital and Management
consulting services to help companies
manage their total HR and employee costs,
enhance HR services, and improve their
workforces. It operates 500 offices in 120
countries and had about 29,000 employees
and insurance brokerage services.
• On October 1, 1940 Ted Hewitt formed Edwin Shields Hewitt and Associates
as an insurance brokerage specializing in financial planning for business
executives. The first client was Parker Pens. Hewitt has historically maintains a
client retention rate of 95%+ . Company’s first regional office was opened in
Minneapolis, Minnesota , in 1959 followed by expansion into Toronto,
Canada, in 1974. Hewitt first office overseas opened in 1985. In 2002 , the
company went to public on the New York Stock Exchange, selling 11.15 million
shares to the public , and the stock is part of the Russell 2000 index. In June
2006 longtime Chairman and CEO Dale Gifford announced his resignation.
Russ Fradin joined Hewitt as CEO and Chairman of the board beginning
September 5, 2006. This was the first time Hewitt hired an external CEO.
• Prior to 2000, most of Hewitt's growth was organic. Acquisitions of and joint ventures with very small
boutique firms, primarily defined benefit plan actuaries and human resources consultancies, were typical. In
2000, Hewitt began growing through larger mergers and acquisitions. The first of these was the
announcement, in late 2000, of a plan to integrate its UK and Ireland business with Bacon & Woodrow, a
leading retirement and financial management consultancy in the UK.
• In June 2003, Hewitt announced the completion of the acquisition of Northern Trust Retirement Consulting,
L.L.C., expanding its portfolio of outsourcing clients. Later in 2003, Hewitt acquired Cyborg Worldwide, Inc.,
expanding outsourcing capabilities to include payroll services.
• On October 1, 2004, Hewitt completed the acquisition of Irvine, CA - based Exult Inc., a company specializing
in Human Resources Business Process Outsourcing or HR BPO. This move was to ensure Hewitt would remain
competitive within the HR Consulting and Outsourcing space, in which HR-BPO was a rapidly growing area.
• As of early 2010, Hewitt had approximately 2,600 clients, making it the world's largest provider of multiservice HR business process outsourcing (BPO), and it claimed to be the only firm fully integrated HR
outsourcing and HR consulting. Hewitt's clients included over half the Fortune 500 and a third of the Fortune
Global 500. Hewitt had 86 offices in 37 countries and employed over 27,000 employees.
PRODUCT AND SERVICES
• HR CONSULTING SERVICES ( 29% ) :- Hewitt’s consulting services enable companies to
confront complex business challenges. This includes…
• Creating and managing retirement programs.
• Designing and delivering health plans that rein in costs.
• Improving the performance of the workforce and solving the complex HR issues .
• Provide tailored employees communication services.
• HR OUTSOURCING SERVICES ( 71% ) :- Enable clients to focus on their core activities ,
maximizing value and effectiveness across the full range of HR programs.
• Hewitt wants to be the best in the People Business , bringing together our
broad capabilities in unique ways to provide unparalleled result for client ,
associates and investors.
ASIA PACIFIC VISION
• In 2011 Hewitt will be the most sought after management consulting firms in
Asia Pacific . “ We will be profitable $ 150 million business , with best talent
and recognized as the best employer in the region.”
HOW DO VALUES LEAD TO THE VISION
Teamwork leverages our individual
talent to serve our client and their
people exceptionally well. “ Winwin” relationships are our goal as
we work with clients, other
associates, business partners, and
Ethical behavior, honesty and
integrity are fundamental
characteristics of our conduct in all
aspects of our work
We treat people with respect and
dignity. We build positive trusting
relationships through open
communication, sharing and valuing
We all have the responsibility to
deliver quality and innovation in our
work through personal initiative and
continuous development of skills and
knowledge, with strong support from
• Who Should We Hired ?
• What Does Growth Mean ?
• How Should Leader Act and Behave ?
• What Does Success Mean to Hewitt And Its Employees ?
HR SERVICE VALUE CHAIN
Strategic HR Consulting
( HR BPO)
POSITION OF HEWITT IN THIS VALUE CHAIN
• Hewitt does not provide services for Recruiting and
Staffing to avoid creating conflict among their clients
jostling for same talent pool.
• Primary part where Hewitt is presently focusing is HR-BPO
• 70% of Hewitt’s business comes from the Outsourcing and
of it 75% comes from HR-BPO outsourcing.
• Cost saving for the client.
• Thorough understanding of the legal aspects.
• Top quality of HR consultants .
• Security of client data.
CRITICAL SUCCESS FACTORS
Critical Success Factors
Cost saving for the client
Top quality HR
Security of information
Score out of 10
SCORE OUT OF 10
Cost saving for
Top quality HR
SCORE OUT OF 10
TOP Qul HR Consult.
Security of Info.
Understnding legal aspects
PROBLEMS IN 2006
• HR – BPO revenues declined by 19% year over year in fiscal 2006 significantly
impacted the termination of its Bank Of America contract.
• The decline was attributed to taking on too many contracts ( Thus not
properly vetting and modeling them ), and issues with payroll, recruiting, and
• Even the average revenue per participant in the BPO business reduced by
21.4% suggesting that there has been a major pricing pressure in the industry.
• Hewitt’s consulting business was also experiencing recent margin pressures
due to increased incentive compensation costs resulting from unfavorable
trends in consultant turnover.
THE KEY TRENDS OF FINANCIALS OF
Clearly there has been pressure on the firms margin in the last few years. This
is due to the following reasons.
• Consulting business is facing pressure due to rising attrition, and burgeoning salaries of the consultant.
• BPO business is facing pressure on pricing front, as the clients, are not accepting price hikes, and are
unable to recognize the differentiation offered by Hewitt.
Hard to crack BPO
Where Hewitt need to improve
• Innovation and Entrepreneurship :• Networking :-
$ 10 Bn Company
40% non US revenues
20% of revenues from mid-sized companies
Bring 40% BPO clients under consulting net